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Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency. Further goals of a monetary policy are usually to contribute to economic growth and stability, to low unemployment, and to predictable exchange rates with other currencies.

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Question regarding impulse response functions (IRFs)

My understanding is, IRF of output ($Y$) to monetary shock ($\epsilon$) is a set of partial derivatives, i.e., IRF of output ($Y$) to monetary shock ($\epsilon$) is {$\partial Y_{t+j}/ \partial \epsil …
Hyun Jung's user avatar